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Jobs are Australia's main export - tariff inquiry report tabled in the Senate

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12 November 1992 (o .


The Australian Democrats today stepped up their campaign for a twelve months' pause in tariff cuts, in the wake of today's rise in unemployment.

Every Member of Parliament received a copy of the first three Interim Reports of the Democrats' Independent Parliamentary Inquiry into Tariffs and Industry development, which were tabled in the Senate this week by Senator Sid Spindler, Chairman of the Inquiry.

"These days Australia's main export is jobs as today's further and disastrous unemployment increase shows," Senator Spindler said.

"Evidence before the Tariff Inquiry shows quite clearly that tariff cuts are causing major job losses, that industry costs are continuing to escalate and that other countries are protecting their industries and primary producers, helping them to flood our market with cheap imports, causing factory closures and

increasing unemployment."

"The Government and the Coalition Parties didn't want this Inquiry to get off the ground and voted against it in the Senate. But now they will have to face the reality of suffering in the community. These Interim Reports are only the first batch of evidence on the consequences of their actions Coalition and Government HP's and Senators will have to face." __

"In addition to public hearings „_in Canberra, : Melbourne and Adelaide, the Inquiry held meetings in six Victorian- regional -­ centres. We found that people in the country are bit-even harder than in capital cities, with unemployment in-some-areas-of the— Ararat region a disastrous 29% and youth unemployment over 50%

across the State." ___ . . . _____

"The Inquiry heard evidence of Chinese textile workers earning a $20 wage for a six day week, with minimal work safety

provisions or environmental safeguards."

"No wonder that import penetration in textiles has reached 50%. In heavy engineering, it is 60%, in furniture 35%, while cars and trucks recorded a 40% increase in just one year."

"Other countries are protecting their industries with car tariffs 10% in the European community, 15% in Korea, 42.5% in Taiwan, 50% in the Philippines, 100% in Indonesia and 200% in Thailand."

"The level playing field is non-existent and the Government is leaving it all to the so-called free market while Australian unemployment rises from 6.7% in 1990 to 9.4% in 1991, to the appalling 11.3% in 1992 announced today."

"If Government and Coalition members of Parliament had bothered to see firsthand what these figures mean for Australian families they too would call for a change in protection and industry policy."

"The Government would do well to revise its position - the

Democrats and the community will make Government inaction a major election issue," Senator Spindler concluded.

For further information: Contact Senator Spindler - 06 277 3640 (w), 06 255 2343 (h).


Page: 2243 [ P R O O F ]


Senator SF1KDLER (Victoria)(5.15 rise in this debate on the Appropriation Bills 1992-93 to address the issue of industry development or, perhaps more correctly, what needs to be done to ensure that our industries do not go down the drain totally and that they can be developed and made more competitive in international markets.

On 17 June 1992, I moved to establish a Senate inquiry into tariffs and industry development. That move was prompted by increasingly desperate appeals from

Australia's manufacturing industries that Australia's industrial capacity and Australian jobs were being destroyed by cheap imports encouraged by the Government’s tariff cutting

regime. The Government's program called for inexorable step by step reductions until the year 2000, when the tariffs on cars would be down to 15 per cent; on TCF products to 25

per cent or lower; and on all other

manufactured goods no higher than 5 per cent.

Dr Hewson went one better. He proposed a scorched earth policy with zero tariffs by' the year 2000. The consequences of this policy are now on the public record for all who are prepared to look at the evidence. In June

1990, unemployment was 6.7 per cent; in June last year, it was 9.4 per cent; and at the

beginning of this year, it was 10.4 per cent. When I moved to establish the inquiry, it was 11.1 per cent and destined to remain at

approximately that level to this day.

The terms of reference of the inquiry were designed to probe the connection between tariff cuts and the continuing loss of jobs and the wider social consequences of

unemployment by establishing-and I quote:

. . . the effect of varying levels of protection on

employment, public revenue, social security expenditure and regional communities dependent on particular industries.

The inquiry would seek to obtain relevant evidence through public hearings and written submissions from employers, unions, industry

associations, consumers, workers, local government and community groups generally.

Somewhat predictably, neither the

Government nor the Opposition wanted to hear first-hand evidence from the victims of their policies. They preferred to stay in their Canberra cloisters and pursue their free

market ideologies. To their shame,

Government and coalition senators combined to vote against the inquiry, hoping to keep the evidence of the damage their failed economic theories were causing from the communities which they purport to represent.

This may have been the end of it, but on this occasion our democratic system proved that it could survive attempts to subvert it. The Clerk of the Senate confirmed that there was no prohibition on an individual

parliamentarian establishing his or her own independent parliamentary inquiry and to use normal parliamentary entitlements and resources to do so. However, this did not cover inquiry staff, travel or advertising costs which,

for a three-month bare bones budget, were in the end co vered by contributions from a range of individual enterprises, industry associations, including the Chamber of Manufactures, and the Textile, Clothing and Footwear Union.

Former parliamentary adviser and lawyer, Ms Lesley Vick, was appointed inquiry secretary. Mr Ernest Rodeck, National President of the Institute of Management,

agreed to act as executive secretary of the inquiry. Inquiry funds are administered by public accountant Brian Harrisson and are subject to audit by KPMG Peat Marwick. My colleague Senator Sowada contributes valuable expertise in her capacity as industry

development spokesperson for the Australian Democrats.

The title, 'Inquiry into Tariffs and Industry Development', indicates that the ambit of the inquiry is wider than protection devices such as tariffs or quotas. Indeed, the inclusion of

that term should not be taken to indicate that the inquiry was initiated out of a desire to



return to the uniformly high protection of the 1950s or 1960s. That way leads to

featherbedding, lazy management and high costs for industry and consumers.However, the inclusion of industry development does indicate determination to ditch the utterly irresponsible reliance on so-called free markets to determine the extent to which the social, economic and environmental

aspirations of Australians can be realised.

It is time to discard the failed concept of economic rationalism. It is time to adopt a deliberate strategic approach to each industry on a sector by sector basis and to determine whether the industry should be maintained, phased out or boosted. This assessment must be made not only on the basis of short-term economic considerations but also must take into account social and environmental consequences, alternative employment prospects, long-term implications for Australia's economic and strategic

independence, social cohesion and cultural sovereignty.

It is little wonder that neither the

Government nor Dr Hewson wanted this deliberate strategic approach. It would have meant loosening their desperate grip on economic rationalism and their reliance on

free markets for all decisions. It is a stance which appears to absolve them from their responsibility to govern for the benefit of the people who have elected them. In fact they are, of course, guilty of dereliction of duty for abdicating just these responsibilities.

The evidence collected by the inquiry will force them to confront the fact that they are culpable and will lead, hopefully, to a change of attitude and a change of direction before it is too late for Australia's manufacturing industries and primary producers. The inquiry has received over 50 submissions, has collected a large body of research material and has held two days of public hearings in Melbourne, one each in Canberra and Adelaide, as well as shorter, less formal meetings in Warmambool, Ararat, Mildura, Shepparton, Wangaratta and Albury-Wodonga. Further public hearings are scheduled for Geelong, Ballarat, Bendigo, Sale

and Baimsdale, as well as Launceston, Sydney and Brisbane.

The focus today is on the evidence received during the first three public hearings in Melbourne and Canberra. Madam Acting Deputy President, I seek leave to table the interim reports of those three hearings.

Leave granted.

Senator SPINDLER--I thank the Senate. Four major themes emerged from these reports: firstly, there is a significant

correlation between tariff cuts and the increased levels of unemployment; secondly, there is significant intervention by other governments to develop and protect their industries and to erect barriers against imports from Australia and other countries; thirdly, the promised cost reductions due to micro-economic reforms have not eventuated; and, fourthly, low wage levels, unacceptable working conditions, lack of health and safety standards and the almost total absence of environmental safeguards in some competitor countries, raise the question of how Australia can best maintain hard won living standards and avoid being dragged down to the world's lowest levels in these areas.

Statistics provided by Ms Anna Booth, National Secretary of the TCF Union, indicate that the import share of textile and shoe products has risen to almost 50 per cent from 26 per cent in 1985-86. Today, in answer to a question asked by me, the Minister for Industry, Technology and Commerce (Senator Button) provided different figures. I know which figures I would like to choose. I will provide the Minister and the Senate with the

figures which substantiate this claim made by the TCF Union based on information provided by the Bureau of Statistics.

Clearly, the recession can be blamed for a drop in total demand. However, it is less plausible-in fact it is wrong--tq blame the recession for a change in the composition of sales in a given industry. Job losses as a result of that influx of imports in the TCF industries are at this very moment continuing at the rate of 200 per week on a national basis. A recent survey of 203 TCF companies by Arthur Andersen indicates that employment is likely

to continue to fall at least by another 5 per cent in total during 1992 and 1993 unless there is an immediate turnaround in

Government policy towards import protection.

Mr Richard Dowe, Executive Director of the Heavy Engineering Manufacturers

Association, reported a 60 per cent loss to imports in heavy engineering since 1985. He referred to a Queensland University study showing that each $lm of manufacturing activity retained in Australia generated 29.5 person years of employment, $280,000



government revenue, $231,000 social security savings and $255,000 increased disposable income. It behoves us as a nation to look at both sides of the ledger. We should not simply chase down the road of economic rationalism, saying that sometime in the future we will receive some benefits.

In the furniture manufacturing industry, which is employing directly 50,000 workers, imports have reached a record 35 per cent. And in the sugar industxy export earnings had dropped in 1991-92 by approximately 25 per cent as a result of a significantly lower tariff as well as adverse weather and lower world prices.

Senator Macdonald--That is absolute rubbish. The tariff has absolutely nothing to do with it.

Senator SPINDLEB-Senator Macdonald should have a look at the Queensland sugar industry; he should look at what the

Government is doing, with his support, to the sugar industry. In July imports of cars and trucks recorded a 40 per cent increase in just one year.

Let me turn to what other countries are doing to protect their industries. An example of the readiness of other countries to protect their own is provided by the United States Industries Mobilisation Act which was used just three years ago to prohibit the

importation of propeller shafts, even though substantial orders had already been placed with an Australian manufacturer.

The Thai Government ensures that Thai producers of sugar can recoup all their fixed costs from domestic sales, enabling them to savagely cut their prices on international markets, veiy effectively keeping out Australian sugar. Tariff and quota protection used by other car producing countries is substantial, starting with 10 per cent in the European Community, even though it has easy access to the world's largest market and long production runs.

Korea has in place tariffs of 15 per cent and a total ban on the import of Japanese vehicles. Other countries provide incentives for the birth of new car industries by imposing prohibitive tariffs: Taiwan 42.5 per cent, the Philippines 50 per cent, Indonesia 100 per cent, and Thailand 200 per centAustralia is now one of very few significant car

manufacturing countries without quantitative

restraints of some sort. The agricultural subsidies used by the United States and by the Europeans, notably France and Germany, are legendary at an average 40 per cent, with some States in the United States providing subsidies of up to 90 per cent.

The emerging data from the inquiry points to the rest of the world protecting their

industries and their jobs while our

Government, aided and abetted by Dr

Hewson, is prepared to sacrifice our industries on the altar of discredited theories which are not of this world.

The suggestion that we are prevented by GATT from taking action is simply not true. It is a furphy. Article 12 of GATT provides a specific exemption for countries with balance of payments difficulties and allows them to use protection measures to address their difficulties. Heaven knows, Australia has balance of payments difficulties. All it takes is

some political will.

Costs rise as tariffs fall. That is another finding which is very clearly emerging from the inquiry. When the Government embarked on its tariff cutting program Australian manufacturers were led to expect that micro­ economic reform would reduce their costs. However, these cost reductions have simply not been delivered.

The failure to pass on stevedoring cost savings to shippers is on the public record. However, it goes beyond the failure to deliver cost reductions. Industries are facing rising costs even as protection levels are reduced. The Chemical Industries Council testified at the inquiry that last year alone government charges had risen by 9.5 per cent. The two­ way squeeze industries are facing is one more factor supporting a 12-month pause in tariff cuts.

But there is another side to this situation. The most telling example of the pressure faced by Australian industries was the evidence about wage levels in China, which in 1991 provided 69 per cent of clothing and 55 per cent of footwear imports. This had risen from 53 per cent and 27 per cent respectively in

1988. The evidence was that the wage for a six-day week in a Chinese textile factory is the equivalent of $20. There was little evidence of work safety provisions which we take for granted, or the anti-pollution safeguards our manufacturers are correctly obliged to use and which they have to cover in their cost




We have a choice as a community. We can tiy to compete with these exploitative

practices and in the process negate the

industrial, social and environmental standards we have. We would depress our standards in trying to compete. Very clearly, we cannot

compete successfully. So we have a choice. Do we buy cheap products, do we allow imports to come in and do we throw our workers on the scrap heap and pay higher taxes to pay them unemployment benefits for doing nothing? Or do we continue to pay current prices for consumer goods, do we forgo cheaper prices for the goods we use and continue to have people in productive work?

However, it is not a black and white choice. The evidence in this inquixy is not pointing to high protection as the saviour and the be-all and end-all of what needs to be done. What is being requested is a pause so that we stop destroying our industries, stand back, look at each industry sector and develop the measures that need to be taken not only to save

industries and to continue putting people in jobs but also over time to increase the

competitiveness which ultimately will lead to greater prosperity for all Australians.